theglobaljournal.net: Latest activities of group Pascal Lamy

The Danger of a Global Governance Deficit

2013-04-08T14:00:03Z

Pascal Lamy, Director-General of the World Trade Organisation, addresses an audience at Bilkent Univeristy Ankara upon receiving a Doctorat Honoris Causa, 15 March 2013.

Ladies and gentlemen,

Being with you in "bilim kenti," the city of learning and science, I am both honoured and moved.

"Honoured" because there is nothing more humbling than to stand here before you today, in this house of knowledge, to speak about the place of the World Trade Organization in the global governance architecture. It is the researchers, scientists, and academics like you that allow the world to engage in a deeper reflection of where the world is headed. It is the bastions of science, such as the University of Bilkent, that allow us to look at our planet from a distance - stopping the clock on our day-to-day chores - to assess where we really are and where we ought to be going.

"Moved" because I still remember the very founder of this institution, Ihsan Dogramaci, who had contributed to the establishment of numerous public institutions of higher learning, who had served as rector of Ankara University, and as founder and first rector of Hacettepe University. A towering figure in the world of knowledge and education, and a dear friend of my late father-in-law. I pay tribute to his family members in the audience.

Ladies and gentlemen, to speak about global governance, is no easy task, in particular in a world as troubled economically and as challenged politically as the one that we live in today. Since 2008 we have been in the midst of the deepest economic crisis that the world has known since the Great Depression. We have witnessed political turbulence - such as the neighbouring Arab Spring - of proportions few had thought imaginable. Social pain and widespread unemployment have been the consequence. Meanwhile, climate change has continued to progress unabated, with Tsunamis and other natural disasters that we thought were confined to the science-fiction universe, taking place right under our very own eyes.

In the face of all this, it would be easy to shrug one's shoulders in despair. It would be easy to feel helpless and overwhelmed. And, yet, what history teaches us is that our greatest strength is born of our moments of greatest weakness. The General Agreement on Tariffs and Trade - a watershed agreement in global economic and trade co-operation - was itself born out of the ashes of the Second World War.

In fact, the catastrophy of the Second World War brought in its wake an unprecedented joining of hands at the global level between visionary statesmen and women and politicians who wanted to make the world a better place. A large number of international institutions were created immediately after the war by a humanity traumatized by war and destruction; wanting to build a future based on higher ethical standards, deeper scientific knowledge, and a vastly improved global governance architecture. And, by and large, I would say they made it. But there is more to be done because history doesn't end here. This is just the beginning of another chapter in our collective story.

As we continue to write our history, the world has seen an unprecedented level of globalization. But our capacity to harness that globalization through proper governance has certainly lagged behind. Such a "governance deficit," I would argue, puts the world at risk.

Solid, Liquid and Gaseous?

Ladies and gentlemen, I have often likened governance systems to the three states of mass. The national level, in my view, represents the solid state. The international level, the gaseous state. And in-between would lie the efforts for greater regional economic and political integration, like the European Union which Turkey is attempting to join, which I would say are in a liquid state.

What I mean by this is that our governance chain, today, weakens the further it rises because citizens are left farther behind. Our end goal should be to make our governance structures more solid both horizontally and vertically. For this to happen, we must strengthen the links between the highest and the lowest levels of governance. In this global village, citizens have be involved not only in local governance but in regional and global governance too.

Whichever the state of the mass, what is required to have a governance system work is a combination of political will, capacity to decide collectively, and accountability. Let me now walk you through the four principles of global governance, as I see them.

The Rule of Law and its Enforcement

The first point that I would stress in the creation of effective governance systems is the importance of the rule of law and that of enforceable commitments. Global governance must be anchored in rules, in international commitments, that foster and promote their respect. This is at the heart of the multilateral trading system, with its more than 60 year experience of regulating trade relations amongst nations, and with its binding dispute settlement system that ensures compliance. This is also at the heart of what the international community is striving to achieve on climate change; a multilateral deal in which nations commit to carbon emissions reductions, with accompanying measures to strengthen capacity for adaptation. It is also at the heart of what the international community is seeking to accomplish in the area of nuclear non-proliferation. Commitments which are anchored in a multilateral context; which can be monitored and subjected to effective dispute resolution systems, and which go hand-in-hand with proper capacity building.

Subsidiarity

The second principle that I would stress is that global governance needs to respect the principle of subsidiarity. It is about taking decisions at the level at which it would be most effective to do so. The international system should not be overburdened with issues which are better dealt with at the local, regional or national level.

Coherence at Home

The third principle that I would stress is that “coherence starts at home”. Coherence lies, first and foremost, with the members of international organizations. Take the United Nations. We can and must have the “United Nations Deliver as One”, but for that to happen United Nations members must also "Behave as One” in the different organizations to which they belong in the United Nations family.

Domestic Debate on International Issues

The final principle that I would put to you is that since the political “demos” remains essentially national, legitimacy would be greatly enhanced if international issues were to become a larger part of the domestic political debate. The exercise of democracy today needs an international dimension. The fact that citizens elect the governments that represent them in global institutions is not itself sufficient to ensure the legitimacy of international organizations. The fact that in an organization such as the World Trade Organization, decisions are taken by consensus, and are based on one-country one-vote, may not be enough to ensure its legitimacy in the eyes of our global citizenry. More is required. National actors — political parties, parliaments, civil society, trade unions, and citizens — need to ensure that the issues discussed and decided at the “global level” are carefully explored, first, at the "domestic level."
The Triangle of Coherence

The bad news is that global governance remains far from this ideal structure. The good news is that much of what I have described is already in motion; it is being done gradually, and not through a big bang. The global economic crisis that we are witnessing has accelerated the move towards a new architecture of global governance, in what I have called a "triangle of coherence."

On one side of the triangle lies the G-20 - of which Turkey forms part as a major emerging economy, replacing the former G-8, that is meant to provide political leadership and policy direction. On another side lie the member-driven international organizations that provide expert knowledge, be they in the form of rules, policies or programs. The third side of the triangle is the G-192, the United Nations, which provides accountability.

In the longer term, it is my hope that both the G-20 and international organizations will report to an eventual “parliament” of the United Nations. In this respect, a revamping of the United Nations Economic and Social Council could lend support to the recent resolution on United Nations system-wide coherence. With time, the G20 could even be a response to the necessary reform of the United Nations Security Council.

A structure of this type needs to be underpinned by a set of core principles and values. And this is precisely what German Chancellor Angela Merkel has proposed with the creation of a Charter for Sustainable Economic Activity. It is a commendable effort to provide a “new global economic contract," to anchor economic globalization in a bedrock of ethical principles and values. This would renew the trust of citizens in their policy makers, which is vital to make globalization work.

But let us recognize that this "new software" of values still needs to be constructed and needs to be moved away from an exclusively Western set of values. The African, the Asian and other value systems will need to be brought to bear. Some countries, such as Turkey, seem to me to be well placed to contribute to this new software, the purpose of which is to overcome deeply entrenched cultural divides, and to create a common vision based on human dignity.

The WTO Scoreboard

Let me now turn to the World Trade Organization, and how it scores on the global governance scoreboard. Where does the World Trade Organization feature in the governance landscape? The main mission of the WTO is to regulate trade opening for the benefit of all people. To perform our task, we use four main channels. First, we offer a forum where our members negotiate international agreements which are then adopted. Second, we have monitoring and surveillance mechanisms — including peer reviews — of member states' actions. Third, we have a strong mechanism of adjudication and enforcement of our members' obligations. Finally, we have a mandate to ensure coherence with other international organizations, specifically in the field of capacity building for developing countries.

Ideological Underpinning of the WTO

The basic value underpinning the WTO is that market opening enhances global welfare. The multilateral trading system helps to increase economic efficiency — and it can also help reduce corruption and bad government. At the same time, the WTO also recognizes the importance of values other than trade efficiency via competition. While far from being a perfect model, the WTO is nevertheless a laboratory for harnessing globalization and contributing to the construction of a system of global governance.

In its Preamble, the WTO agreement recognizes sustainable development as one of its objectives. This calls for the consideration of fundamental values other than those of trade opening to include, for instance, the protection of the environment, development as well as social values. WTO members have the right to deviate from market-opening obligations to uphold certain values, such as protecting public morals, protecting the health of people or animals, or the conservation of natural resources. Moreover, pursuant to the WTO agreement, each member is free to determine the values to which it gives priority and the level of protection it deems adequate to achieve them.

There are areas of the WTO where, in my opinion, the organization scores as much as others in the global governance landscape; in other words, areas where it gets an "equal to" sign. But there are other areas where it gets a "greater than" or "less than" sign. Let me walk you through these.

Where the WTO Scores an "Equal to" Others

The WTO is equal to other institutions of global governance in being a quasi-universal, member-driven, organization. It is equal to others in being an inter-governmental organization, albeit one that tries, like others, to reach out to non-governmental actors. It is an organization that is also equal to others in having a Secretariat and it's Director-General, with very limited executive powers, that must remain neutral, and only act as facilitators or honest brokers of the international trade relations between sovereign states. And it is roughly equal to others, quite frankly, in poorly defining the role of the Director-General.

I must confess to you that my job description can be found nowhere in the WTO Agreement - nor that of my predecessors and nor will my successors find it! I have defined my own duties and responsibilities as I went on!

Now, in saying that the organization is "equal to others" in these respects, this is by no means a criticism. When it comes to the actors, the WTO is a classic international organization where governments are members. Many argue that the WTO has problems of accountability. I believe that accountability with our members is high.

The old club of the GATT has now given way to new groupings of states and coalitions. A new "G-7" (consisting of China, Brazil, India, the EU, Japan, Australia, the United States) has replaced the old QUAD (Canada, EU, Japan and the United States) on trade matters.

The proposals of the G-20 (another one!) — a WTO alliance of developing countries on agriculture — are now the benchmark in many areas of the WTO negotiations. There are also important new actors, such as the group of Asean countries or the African group.

Those who criticize small-format meetings — called "green room" meetings in our jargon — ignore the fact that, with around 160 members today, decisions to be taken by the entire membership need first to be prepared in smaller formats like committees in a parliament.

The WTO, to some extent, also embraces non-state actors, as complex as the interplay with these legitimate stakeholders of the Multilateral Trading System may be. Indeed, we have no mandate from our members to enlarge the WTO family beyond governmental representation. Yet, we have made efforts within the current system. We now have annual Public Fora open to all participants, states and non-states, and regular WTO briefings are held for civil society and parliamentarians.

Members of civil society can send in their views under the form of amicus curiae briefs to WTO adjudicating bodies (Panels and the Appellate Body) during dispute settlement procedures. Some hearings in ongoing proceedings have been open to the public.

I believe that in its relations with non-governmental actors, the WTO scores equally to the international organization average. It gives them room to express their views, and welcomes all interaction, even if there is scope to go further.

Where the WTO Scores a "Greater Than" Others

In numerous areas, in my opinion, the WTO scores better than others. First of all, the WTO has a stock of what I would call "hard rules;" disciplines and commitments. Its rulebook spans issues that range from agriculture, to industrial goods and services, all the way to trade in ideas and intellectual property rights. I often liken WTO disciplines to a "fishing net." Some of our nets are tight - even considered to be too tight by some - but some of our nets are wide, and do not catch the entire spectrum of uncompetitive business practices or trade distortions that are out there. Constant information sharing, discussion and negotiation by our members tighten that net.

The WTO provides a permanent forum for negotiations among its members concerning their multilateral trade relations. Global governance requires intense discussions and negotiations — and, from that perspective, the institutional structure of the WTO is well-developed. We have various levels and forms of decision-making that can be multi-stage and sequential. All in all, it ensures that issues brought to the WTO cannot simply be swept away.

I would say that the WTO stock of hard rules, its fishing net, make it the envy of many other organizations in fields such as the environment for instance, where others still dream of much greater discipline and control at the international level. Take the IMF for that matter, and its continued search for new disciplines on currency.

But the WTO also performs better than other international organizations in its monitoring/surveillance and enforcement mechanisms. There are numerous WTO committees and councils where members' legislation is subject to peer review. The WTO Trade Policy Review Mechanism enables the regular collective evaluation and appreciation of WTO members’ trade policies and practices and their impact on the functioning of the multilateral trading system. In fact, at the Copenhagen Climate Summit a few years back, President Obama proposed that the WTO Trade Policy Review Mechanism be replicated in a climate governance context.

Building global governance is a gradual process, involving changes to longstanding practices, entrenched interests, cultural habits and social norms and values. Through greater transparency and understanding of trade policies, the WTO review mechanism contributes to improved adherence by all members to the rules, disciplines and commitments of the organization.

The ongoing negotiations taking place today in the WTO have reinforced this surveillance in the crucial areas of regional trade agreements. The WTO also hosts a monitoring forum on the Aid-for-Trade that is provided bilaterally, regionally and multilaterally to developing countries to assist them in trade capacity building.

In the WTO, the non-observance of the rules may give rise to litigation — and the litigants are bound to accept the decision of panels or the Appellate Body. And there is no doubt, that this where the WTO vastly outperforms other international organizations.

The strength of the WTO dispute settlement mechanism, its binding nature, and severe consequences it creates for non-compliance, not only make it the "crown jewel" of the organization as some have called it, but the crown jewel of the international system. When I speak to my friend and colleague, Achim Steiner, the head of the United Nations Environment Program, he tells me that a similar system in the environmental sphere remains, unfortunately, a distant dream.

Where the WTO Scores a "Less Than" Others

So where does the WTO score less than others? The WTO is a “consensus” based organization as many of you know. With its total of 159 members, the WTO decides when all members agree to decide - essentially! The idea behind this is to try to balance the interests of the big and the small, the rich and the poor. But this inclusiveness in decision making has a cost; it costs the organization both time and effort and often prevents finality from being reached to the many issues under discussion.

We must also remember that WTO rules, and any changes that are made to those rules through rounds of trade negotiations, must be ratified by Parliaments. A process which also takes time to run its course. Consensus, there is no doubt, though, brings legitimacy and so does parliamentary scrutiny.

Consensus-based rule-making in the WTO, when coupled with "bottom-up" approaches to decision-making, and limited Secretariat and Director-General powers, sometimes cripples the organization. In a number of other international organizations, the Secretariat plays a bigger role in leveraging its experience while remaining neutral. It has a "right of initiative;" in other words, the capacity to table proposals to facilitate negotiations and to broker compromises. In the WTO, that role is virtually non-existent, and when coupled with the need for consensus, can make it significantly more difficult to generate expert solutions to problems. In that sense, the WTO falls below the international benchmark.

A study of the role and powers of the various Secretariats and heads of international organizations would actually be very revealing, and I would strongly encourage that a study of this nature be done at the international to trigger discussion and reform.

I have myself looked at the issue, in particular at the "right of initiative" that I mentioned before, of Secretariats and their heads. The situation differs markedly form one international organization to another. The Secretary General of the United Nations and the head of the International Labour Organization enjoy that right, for instance, with various conditions. In the WTO, no such right is enshrined in its constitution, and when/if the head of the organization or its Secretariat advance their views, they take enormous risks in doing so. Countries prefer to tighten the leash on the powers they devolve out of sovereignty concerns, but in so doing, they imperil the functioning and even the survival of the very institutions that they worked so hard to create. In my view, his issue cries out for attention and reform.

Conclusion

Ladies and gentlemen, to conclude, globalization today is posing a serious challenge for our democracies; and our governance systems must respond to it. If our citizens feel that the global problems are insoluble, if they feel they are out of reach, this will risk emasculating our democracies.

The same will be true if our citizens see that global problems can be addressed but they have no influence on the result.

Today, more than ever, our governance systems, at whatever level they may by, must provide citizens with avenues for shaping tomorrow's world, the one they want their children and grandchildren to inherit.

So where is the world headed? Towards more globalization, not less. Technology, the engine of globalization, does not move backwards. We are headed towards deeper integration, wider cooperation, an even greater sharing of responsibilities and interests.

Governing this globalized world can be messy and frustrating. But the fiction that there is an alternative is naïve and dangerous. Naïve because it ignores that we are becoming more — not less — dependent on one another. Dangerous because it risks plunging us back to our divided past — with all of its conflicts and tragedies.

We must work towards a global governance architecture that allows different international organization to borrow from each other the governance systems that work. That teach each other what pitfalls to avoid. The WTO has a little to teach, but also much to borrow.

We must also work towards a system of global governance that enshrines the concept of hard and enforceable law, that respects the principle of subsidiarity, that fosters greater coherence, that takes international issues as close as possible to "home" for each and every citizen amongst us. It must be based on values that can be shared across civilizations, cultures and religions. In sum, we need more solid governance systems, and less liquid and gaseous ones.

With this, I thank you for your attention, and would like to wish you a fruitful academic year.

Opinions voiced by Global Minds do not necessarily reflect the opinions of The Global Journal.

Original Source: WTO

Rs, the Future of Gs

2012-05-15T10:59:14Z

International governance is often discussed in fora designated by cryptic letters. The ‘Gs’ have referred to the Group of 8 (G8), the Group of 7 (G7), the Group of 2 (G2) and now the Group of 20 (G20)*. With the ‘Rs’, a new letter era is on the rise. The proof? The most prominent ‘G’ members want to join.

From May 4-6, a pre-G20 meeting took place in Mexico City. Global growth strategies, the financial stabilization of Europe, the reduction of global imbalances, resistance to protectionism and the protection of green growth were among the key issues discussed. Former leaders of Brazil, Spain, the United Kingdom and Canada – founding members of the G20 – as well as the Director General of the World Trade Organization, Pascal Lamy – all of whom sit on the Nicolas Berggruen Institute's 21st Century Council – issued a statement emphasizing the need for the G20 to merge with the R20.

The R20, like the G20, is an international grouping aiming at coordinating global governance efforts and implementing common policies. The body will be an active participant at RIO+20, which is intended to redefine global guidelines focused on preserving the environment. Unlike the Gs, however, which are based around nation states, the R stands for region. The R20 are, in fact, the “regions of climate action”. The underlying rationale assumes that “the local” is best placed to implement global measures.

The R20 was created under the impulse of the then Governor of California, Arnold Schwarzenegger – its current Founding Chair. In an exclusive interview with The Global Journal in March, Schwarzenegger expressed his belief that the “R20 is not just another NGO or network of regions, it is much more than that. It is a real coalition of forces which believe that climate change and green economic development can be tackled at the subnational level”. The R20 works through “a coalition of partners led by regional governments” and towards the implementation of “projects that are designed to produce local economic and environmental benefits in the form of reduced energy consumption and greenhouse gas emissions; strong local economies; improved public health; and new green jobs.” *

Confronted with the recurrent failure of the G20 to find agreement between its members on these issues, the R20 appears as a new and innovative platform, which provides efficient and implementable results. This stands in stark contrast to the unsatisfactory answer the G20 has provided in response to the environmental issues raised by the Mexico Summit and forthcoming Rio Conference, grounded in "self-country action" and "best practices sharing” as a complement to global treaties. In reality, this means it is likely that few solutions will be implemented. In comparison, the R20 has the potential to be more proactive. The grouping acts through a simple model, by which localities set their own energy strategy priorities, which are then supported through financing and technology brought in by the R20. The results have been impressive: the R20 has created efficient public and private partnerships that contribute to local employment.

With the Kyoto protocol scheduled to expire in 2012, a merger of G20 leadership and reach, with R20 effectiveness, would indeed provide the opportunity to initiate large-scale yet concrete green economy changes in the global governance sphere.

*G8 members: France, Germany, Italy, United Kingdom (UK), Japan, United States (US), Canada, and Russia; G7: France, Germany, Italy, UK, Japan, US, Canada; G2: US and China ; G20: Argentina, France, Japan, South Africa, Australia, Germany, Mexico, Turkey, Brazil, India, Republic of Korea, UK, Canada, Indonesia, Russia, US, China, Italy, Saudi Arabia and the European Union.

(Photo © Rio+20)

New Boundaries for Global Trade

2012-02-22T11:20:15Z

Interview with Pascal Lamy, Director General, World Trade Organization, WTO. Confronting the difficulties of closing the Doha Round, the WTO is under pressure to find a way to rebound. Handling the ‘wheel’ is one thing, but for Pascal Lamy some mechanical work should be done on the ‘engine’ and the ‘accelerator pedal’. The WTO is getting closer to its second life, the after-Doha, if the ‘Members’ want it:

Imagine that your organization didn’t exist and you were asked to invent it. What would you do? How would it be fundamentally different from what exists? What would be the differences regarding mandate, resources and objectives?

You need to take into account that it was not long ago that the WTO did, in fact, not exist. We are quite a young organization having only come into business in 1995. Even the principle of global rules and a multilateral trading system dates back less than 70 years. Now consider why it was that this system and this organization were created: absent global rules, governments showed an unfortunate tendency to employ trade policies that were erratic, short-term oriented and driven by the political pressures of the time. Unpredictable and often hostile trade policies fanned commercial tensions that led, in turn, to a souring of foreign relations and quite often armed conflict. A system in which governments were required to implement transparent trade policies and were not permitted to discriminate against or among their trading partners was and is a good idea. The same is true for the creation of an organization charged with the responsibility for overseeing this system, for negotiating new rules to keep the system current and relevant, and for facilitating the resolution of the inevitable disputes that will arise between countries. So, the rationale for creating the trading system was sound. Does this mean that it is perfect? Certainly not. Most of our rules were agreed nearly 20 years ago and some date back to the creation of the General Agreement on Tariffs and Trade in 1947. These rules need updating to reflect the commercial and geo-political realities of the 21st century. But change does not come easily at the WTO. Decisions require a consensus of the 153 members and in the Doha Round those 153 must agree on all 20 areas of the negotiations if they are to harvest accord on even one of them. Some believe that the decision-making process needs to be re-considered to make it more flexible. The consensus system will, and should, remain. But perhaps we could create the conditions where groups of countries could move ahead in some areas while others opt to remain outside certain agreements. This has happened before and it may represent an opportunity to advance the trading system in the future. Greater attention needs to be paid, as well, to developing ways in which the organization can better address areas which, while not strictly trade related, are affected by trade in one fashion or another. I’m speaking here of climate change and other environmental matters, of social issues and of development.

The system is flexible enough to accommodate changes to trade regimes that are created in other fora in the international arena, but uncertainty persists. There have been no clashes between WTO rules and global rules for, say, the environment or social standards, but the public perception is often that the trading system could be more friendly in these areas. What is clear as well is that even though the WTO provides significant benefits for developing countries, we need to do a better job of ensuring that trade delivers for these members –which comprise more than two-thirds of our membership.

To read the full interview, order a copy of the magazine.

WTO Chief Says World Facing New Leadership Patterns

2011-10-19T07:14:07Z

During his visit to China, WTO Director-General Pascal Lamy said that the present shifts in the balance of power in global trade lean in favor of emerging economies have defined the need for a "new equilibrium" where undeniable "leadership patterns will emerge"

He spoke at Sichuan University in Chengdu (October 19) where he received an honorary doctorate degree. Lamy gave an overview of “The Future of the World Trading System”, saying the continuous tension derived from the quest for "economic leadership" has caused countries to question obligations and rights as well as the principle of reciprocity. This ongoing tension has made it impossible “to reach agreement on a big package of new regulations of world trade in the Doha Round," he said.

Lamy added that the Doha talks have reached a stalemate and asked WTO members to "seek common cause in order to move the trade agenda along."

"We shall be ill-equipped to address this if we cannot break the stalemate. Not only will the world economy suffer from increased uncertainty and lost economic opportunity, but the WTO will also be weakened as paralysis sets in around an intractable negotiation."

Lamy also warned against the rise in regionalism that could potentially lead to discriminatory or protectionist measures warning, “we run the risk of regulatory divergence and a resulting fragmentation of markets.’’

During his China visit, Lamy acknowledged the growing role of China in the multilateral trading system due to its growing economy and domestic consumption.

Read Pascal Lamy’s speech

Pascal Lamy: Need Truly Global Monetary System

2011-10-11T08:36:35Z

In a speech at Deutsche Bank in Berlin Thursday (Oct. 6th), World Trade Organization Director-General Pascal Lamy commented on the future of the multilateral trading system and advocated for WTO members to "keep multilateral cooperation alive," stating, "What we need is an international monetary system which facilitates international trade, cross border investment and a better allocation of capital across nations. What we need is a global monetary system which inspires confidence and offers stability. One which provides the means by which global imbalances that risk endangering stability can be addressed. Differently put, we need to do for international monetary relations what we already did for trade: move from the world of Hobbes towards the world of Kant."

Lamy emphasized the importance of avoiding unilateral measures as he remarked that trade "is not immune to this global state of affairs," continuing, "It is clear that WTO rules will not be able to solve macroeconomic issues at the heart of the performance of currencies worldwide. WTO rules will not fix consumption or saving patterns at home, they will not solve competitiveness issues of domestic industries, and they will not be determining domestic interest rates. All these issues require a mix of cooperation in the macroeconomic field and proper domestic policies which lie outside the remit of the WTO. In the current volatile environment we need to make sure that the WTO system does not crumble under the weight of excessive expectations."

Since the beginning of the economic crisis of 2008-2009, the WTO and its DG have urged members to ward off protectionist measures and to address the challenges of the crisis by acting in a collaborative manner.

To read Pascal Lamy’s speech, please visit the following link:

http://www.wto.org/english/news_e/sppl_e/sppl208_e.htm

Of What Use is Global Governance?

2011-04-12T19:57:44Z

Lamy ponders the Triangle of Coherence

by Pascal Lamy, Director, World Trade Organization (WTO)

I define global governance as the system assisting human society to achieve common objectives in a sustainable (i.e., fair and just) manner. Growing interdependence means that our laws, standards, and values, as well as the other social mechanisms that shape human behaviour, need to be analyzed, discussed, understood, and articulated in the most coherent way possible. This, in my opinion, is the condition for truly sustainable development in economic, social, and environmental terms. Today, three levels of governance meet these requirements, if unevenly. To illustrate this, imagine the three physical states of matter: gases, liquids, and solids.

Today, three levels of governance meet these requirements, if unevenly. To illustrate this, imagine the three physical states of matter: gases, liquids, and solids.

Gas is the coexistence of particles devoid of hierarchical differentiation. In my analogy, the gas state of governance is the international system, composed of sovereign states organized in a logic that is essentially horizontal with a decentralized accountability mechanism. Most international organizations, e.g., the World Trade Organization (WTO), operate in this mode.

An example of the liquid state is the European Union, the very incarnation of an international organization of integration in which Member States have agreed to relinquish sovereignty in order to strengthen the coherence and effectiveness of their actions.

The solid state, finally, can be seen as the nationstate, the holder of “hard power,” able to compel individuals to pay taxes or to respect the speed limit, i.e., real force.

Our challenge today is to establish a system of global governance that provides a better balance between leadership, effectiveness, and legitimacy on the one hand, and coherence on the other, to bring the system of global governance out of its gas state.

What are the specific challenges of global governance, and what are the first obstacles to overcome?

The initial challenge of global governance is to identify leadership. But who is to lead? Should it be a superpower? A group of national leaders? Chosen by whom? Or should an international organization lead? In accord with classical legitimacy, the identification of leadership involves choice by vote among the representatives of the community. This implies that the system has the political ability to deliver a public message and proposals that bring together coherent majorities and give citizens the feeling that they are participating in a debate. Because legitimacy depends on closeness between the individual and the decision-making body, the second specific challenge of global governance is its inherent distance, which causes the so-called “democratic deficit” and lack of accountability. In sum, it means fighting the widespread perception that international decisionmaking is too remote, lacking in responsibility, and not directly accountable.

As for legitimacy, coherence is unique to the nation-state and is transmitted to specialized international organizations with a limited mandate in which these states are members. In theory, this should not be a problem: the coherent action of nation-states within the various fields of international governance should result in coherent global action. In practice, however, states often act inconsistently at the international level.

The distance from power and the multiple levels of governance are a challenge in terms of efficiency. Nation-states resist (more or less strongly) the transfer or sharing of power within the framework of international institutions. Often national diplomatic systems do not reward international cooperation: I know few diplomats whose careers have suffered for saying “no.” Saying “yes” is definitely more risky. The resolution of global problems by applying traditional models of national democracy has its limits. And the credibility of national democracy itself is threatened if global governance fails to attain its own democratic credentials and if citizens feel that the issues that affect them daily, because they have become global, are avoided by the political will they express at the polls.

A new paradigm of global governance exists, and its name is Europe.

If there is one place on earth where new forms of global governance have been tested since the Second World War, it is in Europe. European integration is the most ambitious supranational governance experience ever undertaken. It is the story of interdependence desired, defined, and organized by the Member States. In no respect is the work complete—neither geographically nor in terms of depth (i.e., the powers conferred by the Member States to the E.U.), nor, obviously, in terms of identity. Secondly, the European paradigm is a special case. It is the result of the geographical and historical heritage of the European continent, a continent ravaged by two world wars and the Holocaust, which claimed millions of lives. Europe is a continent of nightmares that gathered the survivors of the era into a collective dream of peace, stability and prosperity. But we should, today, use great caution in drawing universal values from the experience provided by this specific place and time.

The European Coal and Steel Community in the 1950s was created out of the political will to overcome these nightmares and to see peace take root in what French Prime Minister Robert Schuman called “de facto solidarity.” The men and women of that era placed their commitment in a concrete project: to combine the two essential pillars of the economies of the time, coal and steel. To these two elements they added a third: the creation of a supranational institution sui generis—the High Authority of the European Coal and Steel Community.

The essence of the E.U. is already at the heart of this first initiative: the creation of an area of joint sovereignty, a space in which members agree to manage their relationship without the constant need for international treaties. What characterizes the paradigm of European governance is, thus, the combination of three elements: political will, a defined goal, and an institutional structure. The method of governance employed is certainly a major technological leap from Westphalian principles. One innovation is the primacy of E.U. law over national law; another is the existence of a commission with a monopoly on legislative initiative; a third is the creation of a court whose decisions are binding on national courts; a fourth is the creation of a bicameral parliamentary system with, on one side, the Council that represents member states, and on the other, the European Parliament that represents the citizens. These are major institutional innovations, of course. However, they are a supplement, not a substitute, for agreement on a specific collective objective. And global governance is not absent from this objective, at least if we are to believe Jean Monnet, chief architect of the Action Committee for the United States of Europe, when he wrote, “The sovereign nations of the past are no longer the framework in which today’s problems can be solved. And the community itself is merely a step toward the organizational forms of tomorrow’s world.” From this point of view, how is the European system performing today in terms of leadership, consistency, efficiency, and legitimacy? In terms of internal leadership, European governance is doing well, as illustrated by the creation of the internal market of the early 1990s or the euro in the late 1990s. These are two examples of successful synergy between will, the identification of objectives, and the creation of an institutional machinery.

In terms of external leadership (i.e., the ability to influence world affairs), the outcome is weaker, due to the absence of the three basic ingredients already mentioned. International trade is an exception in that it has brought together these three ingredients for the past 50 years into a single trade policy aimed at opening trade, with one negotiator speaking with one voice and through one mouth.

In terms of consistency, then, Europe is doing reasonably well, thanks notably to its institutional structure. Indeed, the principle of collegiality that governs the functioning of the Commission, the monopoly of legislative initiative conferred on the Commission in most areas of community competence, the expanding powers of the European Parliament, and the strengthening of community expertise (including through the Treaty of Lisbon) are the vectors of greater coherence in the E.U.’s actions.

But the fact remains that the blurred boundary between the national and community domains, characteristic of all federal systems, remains a source of inconsistency. Some examples are the poor level of coordination in such areas as macroeconomic policy or budgetary issues, which the present crisis has brought to the forefront, or in other sectors such as energy and transport.

In terms of efficiency, here again Europe has achieved quite remarkable results, thanks to the action by

European Court of Justice, which enforces the rule of law, the extension of voting rights to the majority, and the ability of the Commission to ensure compliance of European rules.

If there is one area where Europe gets poorer results, it is legitimacy. We are seeing a growing gap between European public opinion and the building of the E.U. Despite ongoing efforts to adapt European institutions to the demands of democracy, democratic sentiment remains outside the institutional arena of the E.U. The reasons for European “frigidity,” as

Elie Barnavi, professor and director of the Center for International Studies at the University of Tel Aviv, has called it, are still mysterious and deserve more attention from intellectuals. Look at what remains a blind spot in the construction of the E.U., its anthropological dimension, at the heart of which lies a complex relationship between identity and belonging, between the representation of history, geography, and everyday life. It is as if human societies, that have built so many of their myths upon war, cannot manage to invent a myth built upon peace.

European integration’s rapid development over the past 60 years offers us useful lessons for global governance.

The first is that institutions alone cannot achieve a goal, nor can political will in the absence of a clearly defined common project. A well-thought-out common project does not get results, either, if there is no institutional machinery. Dynamic integration requires the combination of all three elements. But even when all three are present, the lack of legitimacy—real or perceived—may persist. The fundamental problem is that supranational institutions like the E.U. require longterm commitment from national leaders, and that is often incompatible with short-term national politics driven by domestic electoral demands.

The second lesson is the importance of the rule of law and enforceable commitments. Global governance must be rooted in the commitments made by stakeholders in the various laws and regulations backed up by mechanisms that ensure compliance. These principles are at the heart of the multilateral trading system that, for over 60 years, has regulated trade between nations and whose system of binding dispute settlement compels Member States to honour their commitments. Enforceable commitments are also central to the governance structures that the international community seeks to establish concerning climate change and non-proliferation.

The third lesson concerns the principle of subsidiarity, whereby action should be carried out at the level of governance guaranteeing the greatest efficiency. This is one of the points of Pope Benedict XVI’s latest encyclical, in which he states, “The governance of globalization must be marked by subsidiarity, articulated into several layers and involving different levels that can work together. Globalization certainly requires authority, insofar as it poses the problem of a global common good that needs to be pursued. This authority, however, must be organized in a subsidiary and stratified way if it is not to infringe upon freedom and if it is to yield effective results in practice.” The international system should, indeed, not be overloaded with issues that can be more effectively addressed at the local, regional, or national level.

The final lesson for global governance that we can derive from European integration is that insofar as the demos policy is essentially national, the legitimacy of global governance would be greatly enhanced if international issues were more integrated into the national political debate, i.e., if national governments were held accountable for their behaviour at the international level. To establish the legitimacy of international organizations, it is not enough that states are represented by elected governments at the national level, nor that decisions within an organization are taken by consensus on the principle “one state, one vote,” as is the case at the WTO. It will require erasing the borders of democracy between the local, national, and global. National actors—political parties, civil society, parliaments, trade unions, and citizens—must ensure that the issues relevant at the global level are debated at the national and local levels. The good news is that many of these issues are already being examined and we need not wait for a big bang in global governance. The economic crisis we are experiencing has accelerated the transformation of global governance toward a new architecture characterized by what I call a “triangle of coherence.”

The first side of this triangle is the G20, which replaces the old G8 and which provides political leadership and policy guidance. The second side of the triangle includes the intergovernmental organizations and their affiliated NGOs, providing expertise in terms of rules, policies, programs, or reports. The third side of the triangle is made up of the G192, the United Nations, providing a comprehensive framework of legitimacy that allows those responsible to answer for their actions.

Today, globalization is a major challenge to our democracies, and our systems of governance must address this challenge. If our people feel that global problems are insoluble, our democracies risk being weakened and eroded from within by populism with xenophobic tendencies. And even if our citizens believe that global problems can be solved, democracy will be at risk if they feel left out of the decisionmaking process. Today, more than ever, our systems of governance, whether in Europe or globally, must give citizens the means to shape tomorrow’s world, the world they want their own children to inherit.

Model of the future WTO headquarters